With Obama’s re-election, doubts remain about future of Keystone pipeline

CALGARY — As Canadian political and business leaders expressed optimism the proposed Keystone XL pipeline will win approval under a re-elected President Barack Obama, environmental opponents and the U.S. ambassador to Canada cautioned the energy megaproject isn’t a slam dunk.

Obama’s Republican challenger, Mitt Romney, had vowed quick approval of the $7.6-billion pipeline if he had won Tuesday’s presidential election.

But Obama, who earlier this year rejected TransCanada Corp.’s initial application because it needed more environmental review, has remained noncommital about the fate of the line, which would ship Alberta oilsands product to the U.S. Gulf Coast.

In Ottawa, federal Natural Resources Minister Joe Oliver said Wednesday the Conservative government would continue to advocate for the pipeline and expressed confidence it will get the nod from the president.

“We believe that the Keystone XL will be approved by the Americans because it is clearly in the U.S. national interest in terms of national security, jobs (and) economic growth,” Oliver told reporters.

Calgary-based TransCanada is also optimistic about Keystone’s prospects, company spokesman Grady Semmens said Wednesday.

“It fits very well with President Obama’s ... energy strategy. Even last night in his speech he was talking about a priority for him moving the U.S. away from its dependence on foreign oil. That’s what Keystone XL’s all about,” he said.

The project, designed to take 830,000 barrels of crude a day to Gulf Coast refineries, is seen as critical to boosting Canada’s transportation capacity out of the oilsands as petroleum production ramps up north of Fort McMurray.

But the U.S. ambassador to Canada, David Jacobson, said this week that speedy approval under Obama was not a certainty.

“I’m not going to pre-empt the president’s decision,” Jacobson said on the eve of Obama’s Tuesday victory.

“This thing has got to move in an orderly fashion. But I think we need to keep Keystone in the proper context of what is the largest energy relationship between two countries in the world. ... It is not a huge part of that relationship.”

To win regulatory approval south of the border, TransCanada has rerouted the pipeline away from Nebraska’s sandhills and the Ogallala aquifer. Its original path through the environmentally sensitive areas had touched off huge controversy.

The new route is subject to approval by Nebraska’s governor by the end of the year. TransCanada has been told it should expect a decision on Keystone XL from the Obama administration in the first quarter of 2013.

But the route of the pipeline was only one issue that set off opposition to Keystone. Environmental groups have blasted the project for spurring further exploitation of the carbon-intensive oilsands, which they say will dramatically increase greenhouse gas emissions.

Jim Murphy, senior counsel for the National Wildlife Federation, said the Keystone debate returns as hurricane Sandy has brought a renewed focus on extreme weather events and their relation to climate change.

Environmentalists are poised for a new campaign against Keystone, he said.

“We’re hopeful that President Obama is going to answer what we think is an increasing cry to address climate change and I think one of the first things he can and should do — and we’re certainly going to call on him to do — is to say no to this pipeline,” said Murphy.

“Every time the substance of this project gets intensely debated, I think it gets harder and harder for the administration to say yes.”

But Keystone — along with other projects such as the proposed Northern Gateway pipeline to the British Columbia coast — is of paramount importance for the energy industry and Alberta government.

Oilsands production is expected to double to more than 3.7 million barrels a day by 2025 and billions of dollars worth of expansion is planned. But that expansion hinges on finding new outlets to bring Alberta energy to market.

Increased market access is also key to easing the current price differential that exists for Alberta crude, which is costing the provincial treasury millions of dollars.

“When you don’t have access to market, it not only reduces the amount you can produce but the price you can get for it,” Geoff Hill, oil and gas practice leader with consulting firm Deloitte, said Wednesday.

Provincial Energy Minister Ken Hughes said the situation remains the same as before the presidential election, but the Tory government can again lobby in support of Keystone.

“What we have to do is assess the circumstances in the states and continue to advance Alberta’s interests in any way that we possibly can,” he told reporters at the legislature. “Watch us. We will be executing a game plan over time.”

Semmens said TransCanada is also preparing to counter “misinformation” about its pipeline and will “get out there and explain the facts of the project as we see them and its benefits.”

Hill said nobody should assume Keystone is guaranteed, noting Obama has maintained a deliberate ambiguity around the issue.

“The only time there’s a guarantee is when it’s actually approved. And that’s what makes investors nervous,” he said.

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With Obama’s re-election, doubts remain about future of Keystone pipeline

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